EA in 'Play?'

It's no secret Electronic Arts has been feeling some pressure lately. And when the company reports its third quarter tonight after the bell, we'll get the best indication yet as to just how tough times have gotten for the world's biggest game publisher.

And you gotta start to wonder whether this company is becoming a takeover target.

EA is expected to report 31 cents a share on $1.34 billion in sales. But remember, it was just a few weeks ago that EA lowered its forecast once again, and that news followed a dramatic round of layoffs, to the tune of 1,500 people or 17 percent of the workforce. In January, EA said Q3 EPS would be 29 to 33 cents, way below the consensus of 56 cents.

As far as guidance is concerned, the Street's at 13 cents on $851 million for the fourth quarter, and 48 cents on $4.150 billion for the company's full year.

There's every indication that the cutbacks aren't over and that's leading some of the folks I'm talking to to wonder whether this is all about bringing costs back in line with revenue, or whether there's some window-dressing going on to fatten up margins to make this company more attractive to a suitor.

Disney has long been rumored as a possible buyer, something EA has either publicly dismissed or privately denied. Still, with a couple of key titles on the market or on the way ("Mass Effect 2" is apparently doing very well) and "Dante's Inferno" shows enormous promise. (I got an early look at "Dante's" and it is spectacular, though sales projections from some on the Street for this title are not as stellar. Still, did you see the slick Super Bowl ad for "Dante's" last night. Nice!)

So does EA continue to try to go it alone?

No question that the company's third quarter this time around is far better from the red ink it reported during the same period a year ago. But with so many cutbacks, and so much concern over continued sluggishness in video games, EA might offer a tempting treat for somebody with a longer term time horizon.

Fact is, EA shares while vastly under-performing the broader market, are still trading at 23 times next year's earnings. That ain't cheap. And EA could still turn things around. We're on the verge of a new console upgrade cycle, with motion control technology from Sony and Project Natal coming from Microsoft , both later this year.

EA has also seen a big pop in mobile gaming as a key developer for Apple's iPhone and the iPod Touch. EA CEO John Riccitiello told me the business generated from that platform alone was a significant surprise.

But thus far it hasn't been able to save jobs and keep EA in an expansion mode.